When you think of British manufacturing, boat building especially yachts isn't the first thing that comes to mind. However, despite this low profile, it is quite important to the UK economy, and one of those highly skilled creative sub-sectors that economists agree we need to maintain an advantage in. The wider marine industry, which includes leisure activities related to the water as well as the construction of superyachts and small commercial vessels, has a combined turnover of £3bn. What's more, a lot of this involves exports, helping Britain's balance of payments.
On the eve of the Southampton Boat Show, the annual industry showcase, I discussed with two industry insiders Howard Pridding of trade body British Marine and David Tydeman, the CEO of Oyster Yachts about how Brexit is likely to affect the sector. British Marine has 1,600 members, including boat builders, chandlers, brokers, marinas, passenger boats and engine-makers. Oyster Yachts is a very successful boat builder that employs 400 people, with yards in Southampton and Norfolk, as well as offices in Spain and the US.
Both Pridding and Tydeman agree that the fall in the value of the pound has helped firms exporting to the rest of the world. This is particularly important for Oyster, since 60% of their sales are to people who don't live in the UK. However, Tydeman thinks that the big benefit for Oyster has been sales to the US, rather than to the EU.
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Pridding points out that the leisure industry has also benefitted from a weaker pound, which has encouraged tourists to visit the UK, while those already living here have decided to take long weekends at home rather than travel abroad. As a result, firms that organise trips on Britain's inland waterways are having "their best summer so far". Of course, not all the effects have been as positive. Immediately after last year's vote there was a fall in confidence, says Pridding, with his members reporting an immediate drop in sales. The good news is that this seems to have been temporary: by the time of last year's Southampton Boat Show, less than three months after the referendum, confidence had returned to the extent that attendance was essentially unchanged from 2015. And demand for space at this year's show vastly exceeded supply, providing further evidence that "people have now got over the shock of the vote".Tydeman tells a similar story, though with a greater degree of caution. His sales bounced back after the vote to the extent that Oyster has now pre-sold its entire production schedule for next year and is taking orders for 2019. However, he and his competitors have still experienced an overall slowing down of new boat orders, especially in the £2m+ bracket. As he puts it, "a yacht is a luxury purchase and so can be deferred". Indeed, Oyster has had to shift its production towards smaller, cheaper models.Another concern is over the status of EU staff. This doesn't affect Oyster so much, since virtually all of its staff are British, and the firm has always invested large sums of money in staff training. However, Pridding points out that up to 20% of somemarine companies'staff are from the EU, so a mass exodus of European citizens from the UK whether voluntary or involuntary could cause havoc. He also notes that many British people work in Europe's marine industry, so it is in everyone's interests that a solution is quickly agreed that maintains firms' access to skilled workers.Pridding also want to make sure that tariff-free trade can continue. The UK industry has been one of the big driving forces behind harmonisation of regulation, and was instrumental in getting the EU to agree a directive on boat construction. Thisdirective has just beenrevised, he is worried that the departure of the UK from the EU will mean that the industry won't be able to directly influence it when it comes up for amendment in the future. For his part, Tydeman hopes for some sort of trade agreement between the UK and EU that "provides stability and answers the questions that we and our customers have". The Southampton Boat Show runs from September 15-24 at Southampton's Mayflower Park. Tickets can be bought at www.southamptonboatshow.com
Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
Follow Matthew on Twitter: @DrMatthewPartri
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